tv Street Signs CNBC September 7, 2012 2:00pm-3:00pm EDT
mutual funds is the same exposier. generally cheaper and the intraday volume to get in and out instead of pegged to the clez. >> scott freeze, great having you with us. >> new. >> that will do it for this week's edition of "power lunch." sue? >> have a great weekend. we hope you all have a great weekend. "street signs" begins right now. and welcome to "street signs," everybody. is it time to move your money? well, if you are like most of us it's probably sitting in the most popular stocks on the street. but we're going to give you five good reasons why it might be time to break up with the cool kid stocks. stop me if you heard this one before. a stock crashed on reports of apple wants in. is it time for investors to just stop worrying about apple's impact on every other company on the plan sunset. was president obama's pitch
for four more years full of fact or fiction? and airline ceo also calls passengers stupid idiots and tells them to excuse my french, bugger off. does he have a point on this one? plus, a fast and furious way of the states to generate seriously fast money. in the meantime, let's take a look at the markets. they're taking a bit of a breather today after yesterday's spectacular rally. the dow in a narrow 54-point range and still on the best track for the best weekly gain in six weeks. now, if the s&p 500 can hold on to the small gains today and close at another nearly five-year high both nasdaq and s&p on the pace for best weekly gains in six months. let's get to the action with bob and also at the cme with rick santelli. bob, i want to talk to you about this. another week, another outflow of equity mutual funds and yet
sitting at these multiyear highs. what gives here? what's it going to take to get people fired up about stocks again? >> i'll make it very simple. when the bonds funds they have fled in to fall apart and that's not happening right now and perfectly happy. look. in the last three years, 347 $billion outflows. bond bonds, $775 billion inflows. that's where it's going and equity etfs, as well. look where they're going. high yield bond funds. 7% yields and they're right near three-year highs. why would you sell with a 7% yield? why go back in to stocks? even broad bond funds, the biggest etf out there with swaths of treasuries and corporates, mortgage-backed securities. right near a historic high. that yields 2.5%. when this goes down here, then you see movement back in to stock funds but i doubt before
that. >> at this stage we don't look even close. rick, i'm not going to go over the employment numbers. we have been over that. chews it to death. i understand you've got an interesting theory on the unemployment number. >> i do, indeed. this morning on "squawk box" i said that the friday before the election i would suspect to see a 7.9% unemployment rate. well, everybody's thinking conspiracy theory, fudging the numbers. all fun to deal with but what i was referring to was this chart. this is the labor force participation rate and ticked down two tenths to 63.5. you can see on the chart this is a 31-year low. what does it mean in english? it means the amount of people working is getting smaller and the unemployed are disappearing but not because they're finding jobs. so it's politic time. if you look at the president's argument, he should be happy. but you can't be happy.
they're not getting jobs. if you look at the other side, their argument of 40 months above 8% looks ridiculous. we could get it down to 0 if you stop counting the unemployed. the point of this is forget politics. we need people to start looking at in the bureaucratic federal reserve, the treasury of the structural issue of unemployment and we have to find a solution. >> we do, indeed. i'll put it on the wish list and somehow i don't think we're all going to forget politics. it's politics for a couple of months, ricky. thank you for that. well, talking of the jobs report, not so stellar, obviously. but many are worried about where the market is headed. is it time to move your money? these are held by the most widely and this is how they've been doing so far this year. you have, for example, oracle. starting from this side of the wall. up by 27%. google up by 10%. exxonmobil here up by 6%.
microsoft 19% and apple on the end here up by 68% as you can see all all solidly in the green. not bad. in fact, google, exxon and apple all hitting new highs today. but you know what? if you've been following the pack you're missing out. if you take out apple and these other best performers year to date on the s&p 500ment regions, 71%. ebay, 61%. discover, also 61%. 57% gain for suntrust and here, who would believe it? bank of america up by 56% year to date. as you can see, the financials are dominating a sector one point very much unloved and the bidely held like google and exxon with all-time highs today but they're not even among the top 50 performers year to date. those are staggering statistics. the question to pose to you is should investors stick with the pack or should they take the road less traveled?
with us now is andre julian and john kanali. andre, what do you think? do you stick with the pack? do you take the safe, big names we all know and love or take a little bit of risk and hopefully get paid for it? >> i think it's little bit of both. obviously, the economy is telling us a lot right now. you have the stimulus affecting the market which is great. you see gold shoot through the roof today and shows us there could be a qe3 on the road and as long as is there's qe and stimulus the market keeps on going and why there's risk appetite but i think there's underlying issues in the economy and i think there's some problems, especially in europe. we keep on talking about that. so investors should start to diversify and maybe looking at some other ways to protect the assets. >> okay, yes, lots of problems throughout but if you thought about the problems, climbed the wall of worry and missed out on good gains, right, john? >> that's correct. you know, people as we noted
earlier in the program, people have been net sellers of mutual funds for about five years now. of equity funds. so i think right now you have to take a look around and see what's going to benefit most from quantitative easing. that's probably coming next week. today's job report pushed the fed closer to it. things like gold, silver, gold miners will all benefit from the fed -- >> they've been moving on that, on the expectation, john. how much of those gains, those stimulus-inspired gains have been locked in? >> sure, no, i mean, these things have already moved. you're right. but looking back over the last couple of rounds of quantitative easing and operation twist, these things tend to have a long shelf life. as long as the dollar continues to fall and not just the fed doing qe3 but the ecb and taking risk off the table and push the dollar lower and push things like oil, gold, silver, copper all higher. >> but john, i'll go back to the
question and the topic we are talking about here and that is, do you stick with the pack? you know, we all guz google and apple. do you take the risk? look at the financials this year and one time people wouldn't touch them with a pole. what would you do? >> look at the underlying fundamentals of financials. so for example, over in europe the financials have been beaten up badly over the last couple of years and even though they've rallied quite sharply since the mario draghi speech in london in late july, they're not back to where they were last june. so there's a long way to go there. i think for someone with a longer time frame, buying things like financials, buying things like europe would be -- would make sense but tactically, you know, we could wake up at the end of next week a finance minister in europe gets out on the wrong side of the bed and things could go wrong quickly so i think if you have a longer time horizon things like financials, europe do make sense
and technically you probably want to stick with things to benefit most of quantitate i easing. >> got it. investing, andre, john said he likes energy, gold and silver and i understand you have a couple of specific names from a couple of those sectors. >> i have to echo what john says. if you look at the gold sector specifically, take a look at royal gold and silver wheaton. they're not miners. what they do is they invest in min miners. they're like venture capitalists. the miners do the work and then basically what these companies do is they are allowed to buy contracts of gold and silver at set prices so right now a great example, royal gold, they basically can buy gold at $435 an ounce and the way they get the capital back on the investment is coming to market, they buy it at 435. sell it at whatever gold is and make the profit. tremendous business models. if you want exposure to silver
and gold and good companies, those are two to look at. >> royal gold and silver wheaton. thank you both for joining us. let's get a market flash now with jackie deangelis. >> i'm watching shares of digital domain. the c eo resigning and shutting down the operations in port st. lucie. cutting half the workforce at that location. down 91% this year. mandy? >> thank you. coming up next, t-minus 60 days until the presidential election. president obama made his case for another four years last night. but was his pitch full of fact or fiction? we're firing up the fact checker again. and the ceo of ryanair calls passengers stupid idiots. this is coming from a man who, by the way, wanted to charge a bathroom fee and a standing fee. what do you think of him? people tweeted in and you can
still tweet us. we'll reveal your answers later on in the show. [ male announcer ] what if you had thermal night-vision goggles, like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform.
ode to politics now and president obama hitting the campaign trail today after his big speech at the dnc last night. rallying supporters in new hampshire. while his rivals go after him on today's jobs report in rallies in two other swing states, mitt romney wrapping up an event in the battleground state of iowa
and paul ryan taking the stage in nevada. the democrats hit the road after their convention but do they have the facts on their side? our investigations inc. team is fact checking. >> me and a cast of thousands. >> you and a cast of thousands. you have the results for us. >> yeah. so how did the democrats do? here's president obama on his plan last night to cut the deficit. >> you can choose a future where we reduce our deficit without sticking it to the middle class. independent experts say that my plan would cut our deficit by $4 trillion. >> independent experts. which independent experts is he referring to? we found one. the left-leaning center for budget and policy priorities which said the president's 2013 budget along with cuts already agreed to with congress would cut the deficit by $3.8 trillion over 10 years but the congressional budget office
which perhaps unrealistically assumes no change in current laws saws the budget raises the deficit from the baseline projections. the auto bailout was front and center last night. >> we reinvented a dying auto industry that's back on top of the world. >> that's generated debate. gm is behind toyota and volkswagen is coming up fast but taking the entire industry and what he said, the u.s. is indeed on top of the world and that's gm, ford and at least the chrysler part of fiat/chrysler. vice president joe biden returned to something we picked apart last month, what the critics call medi-scare. >> the plan they have put down on paper would immediately cut benefits for more than 30 million seniors already on medicare. >> wait a minute. haven't the republicans repeatedly said that their plan would not affect today's
seniors? yes, they have. but, biden is talking about the republican pledge to repeal obama care which includes immediate increases in medicare benefits, those would go away. want to hear from you, of course. all of our fact checkers are on duty up until the next and more stuff next week. we promise. >> looking forward to it. we'll check it out on cnbc.com. 60 days to go. does it come down to jobs? let's ask jared bernstein. he was a former chief economist for vice president joe biden and we have ray hennerman,. to what extent did the dismal jobs number help romney or too early to swing the vote on polling day? >> i think it basically confirms the narrative looking at the promises that came in on the economy, they simply aren't
coming true in the labor market. in the result of the day's numbers, the labor market is worse than the start of the year. worse compared to last year. the fall in the unemployment rate is simply because record numbers of americans aren't even showing up to try to look for a job and narratives that the president had to overcome and indication that his policies of higher tax promises and expanding government spending aren't putting americans to work. >> jared, how's the president able to spin this if the jobs numbers are potentially worse and do and say to make it not something that counts against him? >> well, i think it's consistent with something he's done and said all along which is that we are moving in the right direction and just moving there too slowly and that's a fact. i think that the deceleration, the slowdown of the pace of job growth is a good example of what he's talking about but we are moving in the right direction. i think democrats want to focus on that. rey and his group want to focus on the too slowly part of it and
that's true. i mean, the one thing i will say is that the president has made a firm distinction between this path that is moving forward and that of his opposition which takes you back to a set of policies with much, much worse outcomes in the job market. in fact, the very policy set that got us in the mess in the first place. don't change heres but get the horse galloping faster. >> do you care to respond, rey? >> the president talked about trying to hire 1 million manufacturing workers in the next term. the last president to do that is ronald reagan and he did that through policies of lower taxes, reduced government intervention. that's what sped up the economy. that's why the reagan recovery is marvelled about. we had a great deal of concern about the fact that the labor market recovery is so slow it's really going to jeopardize economic growth and not just for
next year but for ten years. >> so here's the thing. if cutting taxes really helped as much as rey suggested it would, we would be doing better. president obama is a very aggressive tax cutter. about 300 billion of the recovery act is tax cuts. in fact, manufacturing employment since employment started growing about 30 months ago is up half a million and an exemplary record. that's very good. it doesn't contradict the fact we have to be doing more to grow faster. >> like what? what would you advise? what would you advise the president to do to create more jobs? >> love to see more stimulus, more jobs measures. those are off the table. the thing to see yesterday is resolve the fiscal cliff. i bet rey would agree with me on this one. >> absolutely. >> they set the trap. they should unset the trap and help the economy considerably. >> rey? >> yeah. i mean, you know, all the businesses are taking a look at the fact you're paying hundreds of billions of dollars in new
taxes from the expiration of the tax cuts extended and the new taxes and so that's going to have -- we can see survey data. we hear numbers of businesses taking a look and trying to figure out how congress will resolve that. whatever jared's opinion is on taxes if we have a multihundred million dollar tax set to take effect in january, the economy will go back in to a recession. >> mandy, just ask yourself. is this an economy that needs a self inflicted wound? obviously not. >> well, the economy's very important thing and people going to the polls and we have to wait and see. thank you very much for your debate. in the meantime, listen up, guys. why you might want to pour yourself a big glass of booze free wine tonight. it does exist. pandora crushed on reports of apple to start streaming music but does apple pose as big of a threat as everyone thinks? later on, many hoped the space
coast would be kaput the sign of life coming up next. here's today's "return on retirement." states have a long way to go when it comes to retirees' health care obligations. 17 states have not set aside any funds according to the pew center on the states. so which state has the most funding for retiree health care liabilities? the answer when we return. i've been a superintendent for 30 some years at many different park service units across the united states. the only time i've ever had a break is when i was on maternity leave. i have retired from doing this one thing that i loved. now, i'm going to be able to have the time to explore something different. it's like another chapter. boring. boring.
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today's "return on retirement." which state has set aside the most funding for retiree health care liabilities? the answer arizona. with 69% funded. according to the pew center on the states. for more on retirement, go to retirement.cnbc.com. well, here on cnbc, we're always looking for signs of life in america and today our search takes us to florida's space
coast where the big fear was at the end of the shuttle program we would see the region flat lining but there's something else breathing life in the new area. when's pumping life in to this area? >> it's a fascinating story because, you know, when the shuttle program ended people basically thought it would be an economic wasteland. yeah, the area took a hit. unemployment spiked almost 12% and more than a year later there's substantial signs of hope. one of the largest plane manufacturers in the world relocated the executive jet headquarters from brazil and invested $50 million and just one example of mayor corporations swooping in when the shuttle shut down. >> it caught our eye with the qualified workforce here, especially with the retirement of the space shuttle program and those individuals available to be part of this operation. >> don't forget, florida business friendly in terms of
regulations and taxes. boeing entering the area, lockheed martin, midair, aar. all hiring hundreds of new workers. how did they do it? those involved in recruiting say the keys were, a, being ready. so they were anticipating this for a few years. and b, diversifying beyond just space. the results how this? attracted more than 2,300 jobs, $240 million in capital investment and 360 million in new construction. unemployment close to 12% down to 9.7%. >> we are a community that faces it. we faced it with "challenger" exploded and "columbia" and "apollo" retired and sort of used to that and being used to that doesn't make you immune to it. it makes you remember it. >> it's still pretty high but not the kennedy space center
where space-x and boeing have the big contracts for space. long term they plan to be there and not fly by night companies. >> also tourism. i understand that it used to pump in $2.8 billion each year in to the space coast an i'm sure it was helped with "i dream of genie" reruns but has tourism come back? >> the nostalgia of the shuttle program, tourism held up really well. two, three years out, maybe it takes more of a hit. that's another surprise. another one, brain drain. they thought the population going to exit and they have seen an uptick. real estate is firm. people thought it was doomsday scenarios and not happened. >> that is a good feel-good story. let's get another market flash. >> i got a feel-good stock for you today. watching sotheby's up more than 6%. the company revealing it has a
jv in the works with a state-owned art company and having an 80% stake and an analyst saying that's a limited investment for a hot market. over to you. >> thanks. coming up next, herb is all hot and bothered. his heart rate is percolating and saw some upgrades on green mountain. why he is calling it a perfect example of irrational market xub rans. a ceo called passengers stupid idiots. why he might have a point. it's all coming your way. want to try to crack it? yeah, that's the way to do it! now we need a little bit more... a little bit more vanilla? this is great! [ male announcer ] at humana, we believe there's never been a better time to share your passions... because the results... are you having fun doing this? yeah. that's a very nice cake!
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it's a happy friday edition of "street talk." brian is out today. i have herb riding shotgun. good to see you, herb. let's look at kraft foods. despite promises of kraft of long-term earnings per share growth for their soon to be spun off north american grocery unit, yesterday kraft gain a downbeat outlook, right? for the snack food named --
>> whatever. i'm still stuck on that name. it doesn't have a certain ring to it. it's interesting. when the company talking about this sort of lower than expected expectations and mentioned price increases wouldn't be what they were and it's an interesting aspect and tells you more about the economy and going out further on this. >> priceline, as well. moving higher today on the back of an upgrade from neutral to buy. $740 price target. already at $620. basically saying that priceline continue to expand the reach across the globe in the coming quarters. what do you make of the stock? >> this was off $750 before it started to have a number of big, you know, off the cliff moves because it shows you what happens and tells you more about this market. i have never gotten in the priceline story. i'm not going to start today just because it's such a strange moving target. >> the price is not right for you. overnight, now, this is not really a stock. it is a stock market.
>> actually, it is a stock. there's a stock. >> yeah? >> yes. >> okay. well, we'll get to that in a second. the shanghai composite, a big leg overnight. 3.7%. the biggest one-day jump in the shanghai composite since january. the reason here, a spil, billions of dollars of chinese infrastructure spending here. i have the stats here. shanghai down 3.3% year to date. month to date up by 3.9%. pretty much thanks to all last night's trade. >> otherwise known as the shanghai. you call it shanghai. i think it depends on what you -- >> you say potato, i say potato. >> there's an adr trading an moving on this. it's the rilway trading. it's an adr in the u.s. chinese company. it's actually a very legitimate company. traded here since 1996. never heard of it. never focused on it in all of
think chinese world. >> it's a good proxy here? >> it's one. up 4%. >> one of your favorites. talked about it before and ulta. beat the street. up about 46%. thanks to new products. strong results. and it's increasing the digital focus. ulta.com, i believe. shares year to date up 56%. >> this is a new store story. it has been and continues to do so. the company did not on the call yesterday go beyond its expansion plans saying a quarter ago from a thousand stores to 1,200 stores. i dinged them on that. who knows what will happen five years out or whatever? ultimately look at the profit about of the stores and people looking at this the new stores and comping relative to the older stores. that's part of the story going forward. >> okay. ending on a sweet note, maybe a not so sweet note and this is hersheys.
not so sweet. it is down today. but it plans to buy the remaining 49% in the indian jv and doesn't own and basically the deal is here it's getting control of a chocolate business in one of the world's biggest and fastest growing markets and assume about 47.6 million in debt. it will own the candy brands and beverage brands. have you heard of them? >> i will tell you this. india has been the shining star for hershey and until the last quarter when there's 4x headwinds, it is unbelievable. every quarter, 27%, 20. so now it's the full. >> insatiable appetite for sweet things. >> absolutely. >> like myself. you have lululemon and up first. >> up 11% and four times more than average daily volume.
i'm sitting here saying, why? because you take a welcome at the numbers. you have revenue growth slowing. comp store sales operating. operating margin lower. inventory rising faster than sales. past four quarters. just red flag after red flag. great brand. did better than i expected. but i have to tell you something. this certainly has to cause some people to sit back and say, wait a minute. >> is howard there? let's talk about it. do you think that this is a green flag, a yellow flag or a red flag for you? >> well, you know, i was wearing my panlts today. more than just yoga pants, herb. they're for airplanes and sleeping. herb, the market never worked the way you wanted it much like my hairline did not work the way i wanted it to. the thing about lulu is expectations were beaten down. i think there's people betting against it at this point and
from, you know, breaking down in that summer run and i think they caught people by surprise. >> howard? >> i personally felt, herb, hang on. you can't talk here. i personally felt that the run was over. the lines didn't look that good but a loyal customer base and killing it. >> howard, they're killing it at a lower, slower rate than they were killing it and that's important here. you have profits. a tax, lower tax rate and people has not been anticipating here and i have to tell you something. talking about this company, we talk about green mountain and going to mention in a second, any number of companies out there, what i'm sort of getting heated about is watching a market where stocks like these rising 7% to 11% almost on a daily basis or falling 7% to 11% and from a market perspective, i look at it and i say, why would any individual want to be in a market moving so quickly? >> right. >> makes a parody of the market. >> first, herb, nobody is involved as you know.
volumes are down. everybody's -- >> not on these stocks. >> not in these stocks, herb, but there's so much money and there's zero interest rate and if lulu just shows a little bead of sweat of growth. you get that? worked in bead of sweat. then even though the numbers are worse than last year really nothing happening. if we close here it's all-time highs and my model haves to relook at the ticker. i don't know, herb. sometimes the market just does what it wants to do. >> a typically volatile stock. we want to talk green mountain, as well. an analyst initiated coverage with a buy and seeing the stock really shoot up today. i guess some of it is covering, as well. >> of course it's short covering with a bunch of short squeezes. a $39 target. says a potential for margin improvement. by the way, may have them on later. the issue here is, you have got more competition coming in and the manufacturing of the products. >> herb, we actually agree. but herb, when's a price target
right? last time on they had a $40 price target on facebook. >> howard, up 11%. howard, up 11% on a new -- >> because -- >> initiating coverage. >> but maybe the stock was overshooting to the downside. again -- >> but this is -- >> on this stock, i'm with you. >> kind of turning around, isn't it? since the beginning of august, a revival, this stock. >> i was just in silicon valley yesterday. they're eating these k cups faster. not everybody company has an espresso machine like the old days and so it's like k cars and k cups. it's back in. i don't think -- i don't make too much out of any of these moves right now. you have a breakout. people coming back to work. they're chasing, chasing, chasing. way beyond the averages. take a look at these then. >> thanks for weighing in on this and as we said the analyst is coming on later on in the show and the reasons behind that
buy rating. coming up next, we got to sound off on the ryanair ceo calling us stupid and more than happy to take our money. right? also read your tweets and what you think of him. your answers, some of them actually surprised us. stick around to find out what they were. this country was built by working people.
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i'm bill griffith. at the top of the hour, yes, another month, another disappointing jobs report. can either presidential candidate really fix the employment problem? we look at that. plus, targeting gun stocks today. firearm makers red hot and history suggests they may be ready to crash down to earth. we'll look at that story, as well. the first fuel weekend of football set to kick off. you'll pay more to host a tailgate party this week thanks to the historic drought. those and other happy details at the top of the hour. michele is here with me here at new york stock exchange. mandy, have a good weekend. >> you, too, bill. file this under "why bother?" men can reap the heart benefits of wine with the nonalcoholic kind. it's like chocolate without the sugar. a study of 10 ounces of red wine, nonalcoholic wine origin a
day. they found no significant affect of either red wine origin but drinking nonalcoholic wine, it actually lowered the risk of heart disease by 14%. the risk for stroke went down 20%. so much for having your cake and eating it, too. by the way, enjoy a plethora of health benefits from the strong stuff. well, it's the headline with us talking here. the ceo of ryanair called passengers stupid and idiots. phil lebeau is here. he is no stranger to shocking head loons and makes me think he enjoys it for publicity. >> reporter: it is what he's known for and the person is this man right here. michael o'leary. the ceo, long-time ceo of ryanair. he called a passenger, quote, stupid complaining about a fee. apparently complaining of a fee to print out a boarding pass. well then he was asked about it by newspapers and calling somebody stupid? he dug an even deeper hole.
all those passengers are stupid who think we will change our policies or our fees. well, ryanair, they might want to notice this. what do they say about payback? a report out of italy says the company had a plane in italy that was disinfected following complaints of ryanair passengers complaining about bug bites so they disinfected the plane. they can a look at shares of ryanair versus the airline index. the reason to show you this, mandy, in tandem with the airline index. for the comments that michael o'leary made, charging you to go to the bathroom, ads in the most outrageous of places or calling passengers stupid, people fly ryanair. they'll fly it if they don't like it. >> no obvious backlash and maybe charge for the extra inspects. we have a ton of tweets about this one today. let's read the favorites. he is a great publicist and knows how to get media attention. another viewer says i agree. passengers in general are stupid
and so are ceos. and dan tweets, he's a passenger, too, right? i mean, i think on the whole people were little cynical about this and said, you know, no publicity is bad publicity. >> reporter: another thing, mandy. i fly about once a week and hear it from people. you look over, you see somebody doing something and go, that guy's a moron. this is what people think about other people flying with and i think in general a lot of people sit here and say he's probably right. should he call a passenger stupid? no. but i think that there's an element of that in here, too. >> absolutely. phil, great story. thank you very much. >> you bet. okay. well we promised, we deliver. lazard coverage with a buy rating on green mountain and price target of $39. what are they seeing that herb isn't? herb is back and joining us on the phonedefriis co. why a buy? >> the category is fast growing and they have the lion's share
of brands right now. there's incremental competition but that's a testament to why the category's so strong and growing. i can -- we've done a modeling out for eight years where the rapid growth in the category implied with some seating of share and pricing pressure makes it a very strong top line grower in the double digits and improving free cash flow story and a positive for fy-13. >> matt, this is herb. what do you think about the need that -- the suggestion that green mountain's going to have to cut prices. sorry about that. cut prices at some point to compete with the new entrants in to the k cup production business? >> i really don't see that as that concerning of an argument because for one there's always been competition. someone could always get a cup of coffee. a serve of a coffee from a brewer right now. out of a red can is less than a dime of a serving. it's more than just cost.
>> you have the manufacturers, starbucks or fol jers paying a licensing fee to green mountain. patents come off on september 16th. these guys can renegotiate contracts or go around and use other manufacturers. why wouldn't that be a potential problem going forward? >> well, they're in actually in legal suits right now with a couple of those people doing that. now rogers is one of them. tree house is another. they've been known out there for one capacity of green mountain offers and distribution, the relationships they have with bed, bath & beyond. the product launches they have had. the acknowledgment of starbucks and dunkin to align is an admission they have an advantage in green mountain bringing you to market and the install base. i do, though, model that there will be some share ceded. it's important to note that primarily, though, a lot of brand competition of people talking about is private label.
and that is a -- not as loyal of a customer and probably incremental to the category if anything rather than removing somebody that might be a starbucks, a dunkin, a tim's or green mountain k cup user right now. >> thank you so much for your thoughts on that. >> i think the bottom line is analysts that follow the company for a long time and point out a few pennies of reduced pricing as a meaningful negative impact on earnings. >> what about coffee costs coming down? 40%. helps defend them. >> that's a moving target. the reality of the business is competition coming in. we know what happens historically when competition invades the turf. >> okay. thank you so much. coming up next, apple thinking about cannibalizing itunes to compete with streaming music services like pandora. would this work or should apple double down on the core instead? [ male announcer ] at scottrade,
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are they really a threat? joining us ask a guest who just bought pandora stock this morning, and also brian white. josh, did you buy that stock before or half you heard this news? >> the news came out early this morning, i pulled the trigger. i thought the selloff was overdone relative to what news was. nobody that follows this industry should be surprised that apple will want to get into this streaming music business. it's almost more of a when are they going to? i thought it was a good opportunity. i'm looking for a reason to add to it, and i like the way this is priced into the close. this is called ahammer in technical terms. it looks like the buyers want to take it to the last hour of the day. >> it seems like -- josh clearly is not that perterbed, what do
you think? >> apple is trying to expand to provide devices that consumers can go out and get the best media experience available. they're trying to sell the most media to you. how can you consume media with the best experience if skon assumers are interested in internet radio, this is a great opportunity for them. >> when does it reach saturation. everyone i know has an ipad or ipod. it's not cool because everyone has it. when will happenle keep bringing out products and experiences and becoming the must have thing. >> the market share is only 6% in mobile phones, tab lets it's 68%. they own that market. we're still very early teenages of apple's dominant. >> i'm just curious, brian, what
your thoughts would be. pandora has to different models, the first is advertising, they play audio commercials while you're listening, and that's 80% of the revenue, and the rest is subscription. do you think apple will have commercials or charge for streaming radio and having that be a bigger share of their piece. >> they do have iads that would be a advertising portion of it. i think it's unclear. historically apple isn't a company that likes to go out and inject commercials. i think they want to give the best experience, and that means, not having commercial, but having the best experience -- >> brian, what would your
recommendation be on the back of this? >> i would just say if apple gets involved in this business, it will obviously make life more difficult, but it make make their assets more valuable in the market. >> mandy, let me have the last word, this is what every is forgetting. this validates that what pandora is doing is something that apple sees available to be diving in. i don't know where this started where we think only one company can dominate an entire industry. when was it that if facebook or google wanted to get into your niche your dead. iphone is 20% of the cell phone market. maybe it gets to 30% at some point, so there is 70% of other devices where people can be happy. i think there is enough room in
a industry like this, i don't think it has to be one player. >> the mention of the name apple and everyone starts quaking in their books, thank you for weighing in on that. and, brian is off today, but you can catch him tonight on cnbc sports biz. i'm sure you'll have a great time watching that.it tdd#: 1-800-345-2550 hours can go by before i realize tdd#: 1-800-345-2550 that i haven't even looked away from my screen. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that kind of focus... tdd#: 1-800-345-2550 that's what i have when i trade. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 ...helps me keep an eye on what's really important to me. tdd#: 1-800-345-2550 it's packed with tools that help me work my strategies, tdd#: 1-800-345-2550 spot patterns and find opportunities more easily. tdd#: 1-800-345-2550 then, when i'm ready... act decisively. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 with the exact same tools, the exact same way. tdd#: 1-800-345-2550 and the reality is, with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime...
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